Resolutions passed at roundtable discussion to assist and facilitate businesses expansion into mainland and global markets

According to statistics announced by China’s General Administrative of Customs recently, the bilateral trade volume between Malaysia and China, for up to September this year, was US$73.3b, a 2% decrease compared to the same period last year.

Likewise, trade volume between China and Asean for the same period also decreased to US$342.3b, 1.2% lower than the previous year.

Although the market awaits optimistically trade volumes to reach US$110b and US$500b respectively, reaching the targets requires efforts of both governments and the business communities.

To achieve the Malaysia-China trade volume target in the next couple of years, the Asean-China trade volume for the next five years requires effort of both government and businesses as well as a detailed set of rules.

Following this sentiment and also the successful conclusion of the Maritime Silk Road China-Malaysia Forum held last month, the China-Asean Business Association of Malaysia (CABA) recently organised a roundtable discussion on “Enhancing Trade and Investment Opportunities between Malaysia, Asean and China : the Shandong Gateway”.

This second event by CABA Malaysia since its inception in Sept 2015 was held to share with Malaysian businesses, particularly the small and medium enterprises (SMEs) on the trends and outlook of trade and investments with China.

“Since the launch of CABA Malaysia and the forum, we have received a lot of enquiries from the business community on how CABA Malaysia can help Malaysian businesses explore (business) opportunities overseas,” said president of CABA Malaysia, Tan Sri Lim Gait Tong.

The hosting of the roundtable discussion has been termed as timely with Malaysia being the chairman of Asean this year as well as the establishment of the Asean Economic Community (AEC). Secondly, the much anticipated visit by the premier of China, Li Keqiang next month to attend the East Asian Summit.

Moreover, the negotiations on the Asean-China free trade zone and the Regional Comprehensive Economic Partnership are also going smoothly. In addition, the Belt and Road Initiative put forward by China will bring more development to the countries along the Belt and Road routes, especially Asean countries.

Participants of the roundtable discussion included representatives from various business organisations and enterprises. Also present were Shang Shengping, the second secretary, economic and commercial counsellor’s office of the China embassy in Malaysia, and Ong Yew Chee, director, China desk, Matrade.

In his speech, Ong said that China is one of the best platforms for Malaysian businesses to develop trade activities. Other than first-tier cities like Beijing, Tianjin and Shanghai, second-tier cities like Qingdao and Jinan are markets worth paying attention to due to their continuous growth to attract investments, creative ideas and talents.

At the same time, Ong also suggested e-commerce to be an area of focus and explored by Malaysian businesses interested in the Chinese market. In this, he informed that Matrade will use the e-commerce platform to explore foreign trade provide a diverse allowances and incentives for Malaysian SMEs.

On another note, Lim also said that other than providing suggestions on enhancing bilateral trade and investment, the discussion has also announced a new cooperative platform for Malaysian and Asean enterprises to strengthen their businesses in the heart of China, not only in the Beijing-Tianjin-Hebei Economic Zone, but also encompasses the northwest and western China

“For Malaysia and Asean countries, the Belt-Road Initiative is not merely about the Maritime Silk Road.

“If a suitable platform in China is made available for Asean businesses, they will not only benefit from the Maritime Silk Road but can also be able to expand to a larger market through the Silk Road Economic Belt.

“After all, the Belt-Road Initiative covers more than 65 countries with total economies of US$23t. At present, the economic aggregate of the ten Asean countries is at US$2t and will be US$12t if we take China into consideration,” Lim added.

Speaking to MALAYSIA SME® after the roundtable discussion, Lim expressed his satisfaction with the outcome of the meeting and the resolutions passed, noting that it signals a new beginning to move ahead.

“After this, we are going to form a team and visit China to have a dialogue with them in Beijing and Shandong (on trade and investment opportunities),” he said, adding that many participants have voiced their interest in Shandong.

The five resolutions passed at the roundtable discussion included the continuation of initiatives by CABA Malaysia to explore business opportunities brought by the Belt and Road Initiative.

Secondly, it was resolved that the China-Asean Belt and Road Initiatives Forum should be organised as a major event similar to the Boao Forum and Xiangshan Forum, which address strategic issues. Such forum will provide a strategic push to be centred on Asean International Eco-City, Qihe, Shandong, a new gateway for Asean-China relations.

Thirdly, CABA Malaysia will cooperate with the China-Asean Business Council (CABC) in China to promote the cooperation with other Asean business organisations and other interested agencies.

Fourthly, it was resolved that the Shandong Gateway is an ideal bridgehead for Asean business to expand their businesses into China and vice versa.

Lastly, it was resolved too that a copy of the resolution to be submitted to the relevant authorities which include the Embassy of China in Malaysia, CABC, the provincial government of Shandong and related parties, China’s Ministry of Commerce and Malaysia’s Ministry of International Trade and Industry.

MALAYSIA SME® also spoke to Michael Kang, national president of SME Association of Malaysia who was one of the participants at the roundtable discussion.

“CABA can play an important and bigger role in helping Malaysian SMEs to participate (in the Chinese market). As what some of the other participants have voiced out earlier, there are a lot of problems faced by Malaysian companies wanting to enter the Chinese market such as policy problems, political issues, among others.

“As such, there is a need to work more aggressively to smoothen and work out these problems, internally and regional wise,” Kang said.

Kang also stressed on the importance of capacity building. “All these initiatives are good for the SMEs and the country as a whole but are we ready?

“Most SMEs are not ready. For example, in the past, SMEs are more focused on the Malaysian market. Most are not ready for the export market. Their unreadiness could be in the form of money, production, inability to deliver in big and larger quantities, etc.

“Another important factor is to meet the product standards set by the Chinese government. Many SMEs, especially those in the food and beverage sector are facing problems but are unable to seek for assistance,” he said.

Kang suggested the government sets up a kind of liaison person or agency to play the role of assisting and guiding Malaysian SMEs in China through provision of guidelines and consultancy services and assistance.

Asked on the concentration of Malaysian SMEs in China, Kang said that many are still in the southern region. However, he remarked that it is extremely difficult for newcomers to enter the highly established and saturated market there.

As such, Shandong is seen as a good platform to start, especially for the services industry.

According to Kang, the food and beverage sector offers good potential for Malaysian SMEs especially in the manufacturing of halal products, a segment which the country is strong at. He expressed hope for more SMEs’ participation in this area through, for example, partnerships with large corporations.

Commenting on the weakening ringgit, Kang said that it has posed big problems for SMEs for the past months. As most of SMEs import their raw materials, the exchange rate has posed serious cash-strapped problems to them. Coupled with the weak demand from domestic market, the situation is worrisome for many.

Kang agreed that China is one of the most important markets for SMEs to tap into.

“It depends on which market and city to enter. That’s why we are looking at the One Belt-One Road Initiative. Many SMEs cannot see the relevant benefits from it.

“We need to help them realise how they can leverage on the benefits of this and other such initiatives. As I have suggested in the discussion, one of them is to see how SMEs can participate and be incorporated into the supply chains of these initiatives,” he concluded.